A Farmer Who Has Fixed Amounts of Land and Capital

question 256

Multiple Choice

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired. The farmer's product sells for $2.50 per unit, and the wage rate is $19 per worker. The marginal product of the first worker is

• A)19
• B)1
• C)60
• D)24

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Definitions:

Stock Price

The current market price at which a share of a company's stock can be bought or sold.

Intrinsic Value

The actual, inherent value of an asset, independent of its market price.

Warrants

Financial derivatives that provide the right, but not the obligation, to buy or sell a security at a specific price before a certain date.